Like most entrepreneurs, I seem to be never at a loss for ideas. Some of them, of course, are better than others. So how do you know which ones to pursue, and which ones to leave alone? Forget the MBA courses on entrepreneurship. I’ve developed my own “idea filter”, as it were, for such emergencies.
This filter is more than just a series of linear “stages” that ideas progress merrily along until they reach the logical end point. It truly acts a filter. All ideas go through stage one, but as they pass through subsequent stages of the filter, many of them fall by the wayside (for reasons that will be discussed below). By the time an idea reaches the last stage of the filter, the entrepreneur is completely consumed, and probably needs to be exorcised from his or her “demons.” Ha! Read on.
Stage 1: Wouldn’t it be great if … ?
This seems to happen to me at least 2 or 3 times a week. Every so often, I even go through a phase where it happens almost daily. I’m driving down the road and all of a sudden I blurt out a string of expletives to myself, usually prefaced with the word “holy.” If I happen to be with someone else when I have such an epiphany, you get something a little more in line with coherent English: “wouldn’t it be great if they did x?”. This is the seed. The nucleus of all things entrepreneurial. The birth of the big idea.
As for exit criteria, most ideas never pass through this stage to reach stage two. It’s one thing to come up with original ideas, but it’s another thing altogether to muster enough energy, desire, and passion to drive them along.
Stage 2: Wouldn’t it also be great if … ?
The second stage consists of building upon the original idea. Three or four days later, I may be driving down the street with my wife or a colleague and out of the blue I might say “hey, you remember that idea I had the other day? Well, building on that idea, if they also did y or z, then it would be even better. Hmm.” This represents the refinement of the original idea.
If an idea passes through this stage of the filter, it has enough “substance” to warrant a more in-depth treatment.
Stage 3: Ok, so what does the business model look like?
The ideas that reach stage 3 are the ones that I think are the most volatile. i say “volatile” in the sense that some ideas that get clogged up here do so without justification. Sometimes, the first shot at a business model for an idea isn’t the right one. If the business model doesn’t seem to work, keep trying. History is full of successful companies that had to shift gears. There is no reason as to why the shifting of those gears can’t be pre-company. If the business model doesn’t fit, don’t acquit. Try something else.
In order for an idea to continue its journey beyond this stage, the entrepreneur must sense that a viable business model can be wrapped around the idea. For me personally, I generally don’t leave this stage without some theoretical numbers either in my head or in a spreadsheet. Keep it simple – but realistic.
Stage 4: So what do you think?
Armed with the firm belief that a sustainable revenue model can be leveraged against an idea, I aim to validate that idea. I like to bounce my idea and business model off of my “inner circle”, as it were. I am not ashamed to admit that the Chairperson of my inner circle also happens to be the CEO of my family … my wife. If my wife laughs me out of the room, I go back to the drawing board and take a hard look at what it is I’m proposing.
If she doesn’t fall over with laughter, then I pitch it to a few of my trusted friends and colleagues. Same rule applies – they either laugh, or they don’t. Quite often, my idea gets refined a bit in this stage, as my colleagues will invariably offer up ways to improve or polish the idea.
If you don’t receive validation of your idea in this stage, this doesn’t mean you necessarily abandon it. This is a personal decision that depends very heavily upon your relationships with your colleagues, your business experience, and your intuition as an entrepreneur. If the bozos out there (per the great statesman, Guy Kawasaki) spurn your idea, keep on keepin’ on. We’ve all seen some kooky ideas in our day – and oddly enough, some of them actually end up becoming tremendous successes (the Pet Rock, the Apple computer, Amazon come to mind).
The exit criteria for this stage is simple. You must give the idea your personal seal of approval, based upon whatever validation you chose to undergo.
Stage 5: Hmmm … how can I pull this thing together?
By the time an idea reaches the final stage, the entrepreneur is examining the launch process. What resources do I have available? How can I build this thing? How can I bring this to market? How do I capitalize this operation? What does the management team look like? What are my strategies for partnering, growth, exit, etc.
Some people create business plans in this stage, some do it later. In either case, it is vitally important to have an understanding, even upstairs, as to what your roadmap for success potentially looks like.
When you exit this stage, you are going through a rite of passage. The idea is original, validated by people you trust, seems like it could be sustainable, and you’ve now made a conscious decision to pursue it.
As a simple, personal benchmark, I’d say that for every 100 ideas that I have, only one or two will actually make it this far.
Stage 6: Visiting Martha
This stage is more of a “destination”, rather than a tollgate. On the morning that you wake up, pour yourself into your car, and drive down to your attorney’s office (or the office of your county business license administrator), you have arrived at this sweetest of places. Of course, all of the hard work is actually ahead of you still. But when you write Martha the clerk a check for $35 to register your business entity, you have a reasonably viable idea in tow, and one that is driven by your passion. Hopefully, the filter will have served you well.